--- title: The ‘Great Resignation’ Screams for Improved Retirement-Savings Portability description: RCH President and CEO Spencer Williams, writing in the RCH Consolidation Corner blog, breaks down the phenomenon known as The Great Resignation. Williams makes a compelling case that -- for defined contribution plans -- seamless plan-to-plan portability, including auto portability, are absolutely vital to preserving affected participants' retirement savings, and in ensuring that their retirement savings balances are moved forward when they re-enter the workforce. image: https://blog.rch1.com/hubfs/FromTheTopv3-01.png --- [![Retirement Clearinghouse Logo](https://blog.rch1.com/hs-fs/hubfs/raw_assets/public/Retirement_Clearinghouse_May2022/images/logo.png?width=1000&height=648&name=logo.png "Retirement Clearinghouse Logo")](https://rch1.com/) [Privacy Policy](https://securities.rch1.com/common/PrivacyStatement.pdf) [Sponsors/Service Providers](https://rch1.com/plan-sponsors) [Individuals](https://rch1.com/individuals) [Login](https://rch1.com/#) - [Home](https://rch1.com/home-page) - [Individuals](https://rch1.com/individuals) - [Individuals Home](https://rch1.com/individuals/individuals-home) - [Who is RCH?](https://rch1.com/individuals/who-is-rch) - 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Many of us learned to stop and smell the roses during lockdowns, and count our blessings, especially health and family. For those who were fortunate enough to remain employed full-time during the pandemic and could work remotely, videoconferencing tools like Zoom and Microsoft Teams suddenly became indispensable for conferring with colleagues and customers. Lockdowns, layoffs, furloughs, and remote work also led many Americans, especially Millennials, to reevaluate not just their careers, but the direction of their lives. A lot of workers are choosing to quit their jobs, or stop looking for new jobs in the sectors where they were employed prior to when terms like “social distancing” entered national discourse. Some are giving up work altogether, in favor of pursuing a job they’ve always wanted to do, and feel they would enjoy much more than what they were doing previously. In a *60 Minutes* story [broadcast in January 2022](https://www.cbsnews.com/news/great-resignation-60-minutes-2022-01-10/), Karin Kimbrough, Chief Economist of LinkedIn, explained the social network’s data shows that not only are millions of Baby Boomers retiring early, but millions of Generation-Z members (workers in their teens and early 20s) are quitting their jobs—and more [women](https://www.benefitnews.com/advisers/opinion/auto-portability-key-to-helping-women-save-in-retirement) in this age bracket are quitting than their male counterparts. As the economy has bounced back from [the lows of the pandemic](https://www.benefitnews.com/opinion/mitigating-covid-19s-catastrophic-impact-on-retirement-readiness), the number of job openings has skyrocketed, creating a “buyers’ market” for job-seekers. Quite simply, there are more job openings than available workers to fill them. Employers are offering more flexible work arrangements and increasing compensation targets to attract new workers in this competitive job market. As a result, workers are also leaving jobs for opportunities elsewhere at unprecedented levels. This squeeze has resulted in a trend that has been dubbed by some “The Great Resignation.” In [September 2021](https://www.bls.gov/opub/ted/2021/quits-rate-6-6-percent-in-accommodation-and-food-services-in-september-2021.htm#:~:text=In%20September%202021%2C%20the%20number,and%201.0%20percent%20in%20government.), the quit rate reached 3%, the highest level since the Bureau of Labor Statistics began tracking this data in 2000—and in November, 4.5 million Americans voluntarily left their jobs, [setting another record](https://www.nytimes.com/2022/01/04/business/economy/job-openings-coronavirus.html) for the most quits since 2000. As this trend continues, it provides a golden opportunity for defined contribution plan sponsors and recordkeepers to adopt [seamless plan-to-plan asset portability](https://www.benefitnews.com/advisers/opinion/the-institutionalization-of-portability-is-key-to-reducing-cash-out-leakage)—to ensure the workers participating in the Great Resignation maintain access to the 401(k) savings accounts in their former employers’ plans during their breaks (and when they eventually find new jobs or open their own businesses). Since [auto enrollment](https://www.benefitnews.com/opinion/the-unintended-consequence-of-401-k-auto-enrollment) has become more popular, plan sponsors are facing a proliferation of small terminated accounts (with balances of less than $5,000) as turnover increases, exacerbating already out-of-control [missing-participant](https://www.benefitnews.com/advisers/opinion/consolidate-retirement-accounts-to-boost-savings) and uncashed-check problems, unless they adopt [portability measures](https://www.benefitnews.com/opinion/why-retirement-portability-should-become-employers-next-big-focus) to mitigate the problem. Implementing technology solutions that enable retirement-savings portability can help prevent plan participants who are quitting their jobs from forgetting about the 401(k) savings accounts they leave behind—so their under-$5,000 balances don’t wind up automatically transferred to [safe-harbor IRAs](https://www.benefitnews.com/advisers/opinion/safe-harbor-iras-should-not-be-a-long-term-retirement-solution) (or in the case of under-$1,000 balances, [automatically cashed out](https://www.benefitnews.com/advisers/opinion/automatic-cash-outs-undermine-efforts-to-enhance-financial-wellness)). According to the Employee Benefit Research Institute (EBRI), an estimated 14.8 million plan participants switch jobs ever year, and data from the largest plan recordkeepers shows nearly one-third (31%) of these participants [prematurely cash out](https://www.benefitnews.com/advisers/opinion/to-show-participants-you-care-help-them-avoid-401k-cash-outs) their [small 401(k) savings accounts](https://www.benefitnews.com/opinion/why-small-retirement-accounts-are-the-root-of-many-problems) within one year of starting at their new employers. Workers between ages 20 and 29—which include many of the Generation-Z members quitting their jobs—are 44% more likely to cash out their 401(k) accounts after changing jobs, and participants who earn [$20,000 to $30,000 in annual income](https://www.benefitnews.com/advisers/opinion/retirement-auto-portability-helps-minority-participants-save) are 50% more likely to do so. Prematurely [cashing out a 401(k) savings account](https://www.benefitnews.com/advisers/opinion/auto-portability-can-help-401k-cash-out-leakage) is one of the most destructive decisions a retirement-saver can make. The [Center for Retirement Research at Boston College](http://crr.bc.edu/wp-content/uploads/2015/01/IB_15-2.pdf) reported in a study that, on average, premature withdrawals reduce overall 401(k) savings for retirement by 25%! [Auto portability](https://www.rch1.com/auto-portability)—the routine, standardized, and automated movement of an inactive participant’s retirement savings account with under $5,000 from a former employer’s retirement plan to an active account in their new employer’s plan—is powered by [“locate” technology and a “match” algorithm](https://www.benefitnews.com/opinion/a-new-solution-to-tackle-the-old-problem-of-missing-401-k-s) to identify a holder of an inactive account, and begin the process of rolling the account balance over to an active account in the participant’s current-employer plan. The auto portability solution was created to help participants avoid the temptation to cash out after quitting their jobs or [switching employers](https://www.benefitnews.com/advisers/opinion/job-hopping-a-challenge-to-portable-401k-retirement-benefits). When participants who quit during the Great Resignation eventually land on their feet, the [auto portability](https://www.benefitnews.com/advisers/opinion/why-auto-portability-can-create-more-secure-retirements) solution will enable plan sponsors and recordkeepers to keep track of them, and begin the roll-in process—helping these Americans increase their retirement savings, while reducing [fiduciary liability](https://www.benefitnews.com/advisers/opinion/what-the-dols-fiduciary-rule-doesnt-say) for sponsors and recordkeepers. According to a [2017 case study by Boston Research Group](https://rch1.com/news-and-announcements/press-releases/initial-launch-results-validate-that-auto-portability-preserves-retirement-savings), which examined a large plan sponsor in the healthcare services industry, this company cut cash-outs across all account balances by about half, just four months after adopting auto portability. The case study also found that this sponsor was able to increase its plan participants’ average account balance by 48% during that same period. In addition, EBRI estimates that, if auto portability were to be broadly implemented over a 40-year period, [up to $2 trillion](https://www.ebri.org/publications/research-publications/issue-briefs/content/the-impact-of-auto-portability-on-preserving-retirement-savings-currently-lost-to-401(k)-cashout-leakage) (measured in today’s dollars) in additional savings would be preserved in the U.S. retirement system. This extra savings would include approximately $191 billion for about 21 million Black Americans, and $619 billion for all [minority workers](https://www.benefitnews.com/opinion/how-sponsors-can-help-minorities-save-for-retirement). Ultimately, the Great Resignation offers defined contribution plan sponsors and recordkeepers a chance to demonstrate their commitment to the [financial wellbeing of participants](https://www.benefitnews.com/advisers/opinion/the-rallying-cry-for-improving-financial-wellness) (while simultaneously strengthening the overall wellbeing of their plans). Auto portability has been live for [four-and-a-half years](https://rch1.com/news-and-announcements/press-releases/auto-portability-goes-live)—providing sponsors and recordkeepers with a technology solution that has a viable track record of [improving outcomes](https://www.benefitnews.com/advisers/opinion/every-dollar-counts-in-todays-zero-interest-rate-environment) for plans and participants alike. 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